GVA - Bristol property market update
A recent report on the Bristol Property Market by award winning commercial property consultancy GVA, reveals a surge in optimism in all property markets, fuelled by increasing occupier demand and an ‘insatiable appetite from institutional, private and overseas investors.’
It cites the ‘scale and diversity of its economy´ a ‘highly skilled workforce’ and ‘strength in research, technology and knowledge based industries’ as key drivers in the growth of the property market.
An over-arching concern seems to be how to react quickly enough to intrinsic changes in occupier markets and the current shortage of prime property.
With the UK economy in full recovery and forecasts for strong economic growth of 3% for 2015, property average rental growth looks set to rise by the same amount within 3 years. With Bristol’s financial performance only surpassed by London in the last year, the report suggests that offices will see the most significant rental increase – with a forecast of 1.6% for this year – with the industrial sector seeing a positive surge of 0.5%, increasing to 2.9% by 2017.
With office availability decreasing over the past few years, due to the loss of many buildings to residential uses, demand for city centre office space has increased considerably in the past year.
The report states that ‘demand for prime Grade A space was disappointing in 2014’ but with recent lettings of big firms such as QVC Energy and upcoming requirements for PWC, KPMG and Mapfre Abraxas – take-up should improve.
In the North Bristol business parks market, where there is no scheduled development for the foreseeable future the supply situation may become ‘critical’ unless existing buildings return to the market to satiate demand.
GVA also reveal that low supply is colouring the industrial market and that demand has been erratic, although current development deals suggest that rental growth will increase over the first half of 2015.
The report confirms that the retail market is recovering with a marked reduction in administrations of household names and a string of encouraging lettings in Cabot Circus and The Mall.
In terms of investor demand, the report states that this has now fully recovered from the low levels of 2012, and the only issue is lack of supply: ‘The market is currently lacking stock, and with an estimated £8 of available capital for every £1 of available supply, competition will remain intense!’
Finally, the report reveals that the residential market has surpassed the commercial market in the past three years and played a significant role in the economic recovery in the UK as a whole. The same can be said of the Bristolian market which is growing fast with key housing developments underway both in the city centre and in the suburbs.